Hawaiian Falls Most Since 2015 on Pressure From Bargain Airfares

(Bloomberg) -- Hawaiian Holdings Inc. dropped the most in nearly four years after pressure on ticket prices from heightened competition forced the leisure airline to cut a crucial revenue measure.

The parent of Hawaiian Airlines faces risks from new United Airlines service at Chicago, Denver and San Francisco, as well as new Sun Country Airlines Inc. flights to Honolulu, said Cowen & Co. analyst Helane Becker. Hawaiian also is bracing for additional competition from Southwest Airlines Co., which plans to start flying to the islands next year.

“It seems inevitable that fares remain under pressure in 2019, given the current competitive dynamics,” Becker wrote Thursday in a note to clients.

Revenue for each passenger flown a mile, a gauge of pricing power, will decline 3 percent to 5 percent this quarter, the carrier said Wednesday, citing low fares and sluggish demand. It previously estimated that the figure would drop no more than 2.5 percent.

Wobbly Quarter

The carrier’s adjustment, a day after Delta Air Lines Inc. issued an outlook near the lower end of a previous forecast, stirred uncertainty about how the fourth quarter will play out for the industry. Fuel costs have been swinging wildly, however, and were down almost 20 percent in November.

Hawaiian plunged 12 percent to $33.27 at 12:51 p.m. Thursday in New York after tumbling as much as 14 percent, the most intraday since January 2015, amid a broad market rout. Hawaiian fell 4.6 percent this year through Tuesday, while a Standard & Poor’s index of airline stocks fell 6.6 percent. There was no trading Wednesday in honor of late former President George H.W. Bush.

“Year-over-year visitor growth from North America to Hawaii remains positive, but at a slower pace than industry capacity growth,” Hawaiian said Wednesday.

The airline said fourth-quarter unit costs are likely to decrease 1 percent to 3 percent. That would be slightly better than previous expectations, owing to nonrecurring items and lower-than-expected benefit and administrative expenses.

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